Pavlo Lazarenko, former prime minister of Ukraine, is alleged to have
stolen hundreds of millions of dollars via different criminal enterprises.
U.S. procurators have not even begun investigating his activities in other
countries, limiting themselves to money laundered into the United States.
With President Leonid Kuchma protecting him, Mr. Lazarenko was busy hoarding
money in offshore bank accounts. During this period it was not uncommon
to see transfers of millions of dollars from account to account in different
countries.

According to the second superseding indictment in the Northern District
of California, San Francisco Division, Mr. Lazarenko received money arising
from schemes to defraud committed by the owners and principles of United
Energy International, Ltd. (UEIL), United Energy Systems of Ukraine (UESU)
and Somolli Enterprises, Inc., which were related companies doing business
in Ukraine and with Ukrainian state enterprises as follows: In his official
capacity, Mr. Lazarenko promoted the operations of UESU and related companies
by, among other things, ensuring that UESU had a near-monopoly right to
distribute natural gas to certain commercial enterprises in the Dnipropetrovsk
region of Ukraine and by arranging for the Ukrainian government to pledge
to use state funds to repay the debts of UESU payable to RAO Gazprom, the
supplier of natural gas to Ukraine.

Between 1996 and 1997, UEIL transferred approximately $50 million to
Somolli Enterprises, a Cypriot company controlled by the same individuals
who controlled UESU.

In 1996 Somolli Enterprises transferred the following sums: a) approximately
$50 million to account No. 024/10/61310/00 at AmerBank in Poland in the
name of "ORPHIN, S.a."; b) approximately $14 million to account
No. 5451 in the name of "WILNORTH"; c) approximately $23 million
to account No. 21383 at Banque Populaire Suisse in the name of "ORPHIN,
S.a."; and d) approximately $14 million to European Federal Credit
Bank correspondent account No. 1150-645039 at Pacific Bank in San Francisco
for credit to account No. 151897 in the name of "ORPHIN, S.a."

All were accounts controlled by Peter Kirichenko.

The money was then transferred to accounts controlled by Mr. Lazarenko,
including account No. 08-05785-3 in the name of "KATO-82" at Credit
Lyonnais in Zurich, Switzerland; account No. 5353 in the name of "CARPO-53"
at Bank SCS Alliance in Geneva, Switzerland; and to accounts at European
Federal Credit Bank, among other accounts.

Prior to appointing Mr. Lazarenko the country's prime minister, President
Kuchma was aware of his past and his sins. It is clear that Mr. Kuchma disregarded
incriminating documents given to him by Hryhorii Omelchenko - the former
head of a parliamentary committee on combating corruption and author of
a 1999 book titled "Corrosion of Power" - and instead chose to
have Mr. Omelchenko investigated instead of Mr. Lazarenko.

Western pressure grows

By early 1997, President Kuchma was coming under intense Western pressure
to have Mr. Lazarenko removed. Instead, he chose a course of passive resistance,
one in which the procurator general dragged his feet in the investigation
of Mr. Lazarenko. And Mr. Kuchma clearly had the right man for the job.

Mr. Vorsinov was a local procurator from Dnipropetrovsk who was already
battling allegations that he participated in various illegal enterprises
until one day he came to the attention of politicians in Kyiv. They immediately
noticed his talents and brought him on board.

In 1993 the entire staff of investigators at the Procurator General's
Office in Dnipropetrovsk had sent a letter to the procuratorgeneral in Kyiv
asking that Mr. Vorsinov, the regional procurator, be removed for illegally
terminating cases and abusing his position, as well as on moral and ethical
grounds. In response to that letter, all the investigators whose signatures
appeared on it were summarily sacked.

In October 1995 a parliamentary anti-corruption commission recommended
that Mr. Vorsinov not be appointed procurator general. Despite that protest,
President Kuchma chose him for this sensitive job.

It was among the methods the president employed in implementing his decree
of August 1994 "on combating corruption." It was Mr. Vorsinov
who was given the delicate task of dealing with the accusations against
Mr. Lazarenko. He did so by stalling and prolonging the investigation, by
spending more time investigating the whistle-blower, Mr. Omelchenko, than
the accused, Mr. Lazarenko. There is little doubt today that this entire
scenario was cooked up by President Kuchma, who had been protecting, and
possibly benefiting from, the protection being granted to Mr. Lazarenko
from the very beginning.

On July 1, 1997, Mr. Lazarenko was relieved of his duties as prime minister
of Ukraine. The pressure from the West had become too much for President
Kuchma to bear. Mr. Lazarenko had become a liability and thus had to go.

In December 1997 President Kuchma fired Mr. Vorsinov and appointed Oleh
Lytvak as Ukraine's acting procurator-general. On December 23, 1997, Mr.
Lytvak formally charged Mr. Lazarenko with criminal activities.

But Mr. Lazarenko was a national deputy and, therefore, immune from prosecution.

Lazarenko on the offensive

Angry at President Kuchma for having relieved him of his prime minister's
post, Mr. Lazarenko went on the offensive. First he created his own political
party, Hromada, which he stated was in direct opposition to Mr. Kuchma.
Then he proclaimed that he would run for president in the next elections.
Mr. Kuchma was beginning to take notice of Mr. Lazarenko's new face.

Then the offensive grew. Mr. Lazarenko wrote in October 1998: "I
want to state, and place on the record, that the 'case of the Swiss bank
accounts' and 'Lazarenko's dacha [vacation home],' and all the other, I
am convinced, affairs which will be concocted by the masters of political
intrigues in the Cabinet of Ministers and by the procurator general are
an open attempt to discredit the opposition, nothing but a commissioned
political affair. Knowing our Procurator General's Office, I would not be
surprised if I am to be accused of murdering the Russian emperor, Nikolai
II, or taking part in the murder of Trotsky." (Holos Ukrainy, October
28, 1998).

Mr. Lazarenko ("Pasha," as he was called by his cronies from
Dnipropetrovsk) knew his topic. He had himself witnessed many such perversions
of justice by the Procurator General's Office. Interestingly enough, Mr.
Lazarenko did not go after President Kuchma in this article. It seems that
he still had hope that President Kuchma would not press for his imprisonment
and that a deal could be cut.

Neither did Mr. Kuchma press for a drastic solution to the problem. If
anything, the president sought to delay the Lazarenko case and keep Parliament
from a vote on lifting his immunity. It is now clear that President Kuchma
was afraid of provoking Mr. Lazarenko into naming how much money he might
have given him.

Mr. Lazarenko felt that he was still powerful enough to conduct his businesses.
On December 2, 1998, he was detained while attempting to enter Switzerland
by car and using a Panamanian passport he had obtained by "investing
money into the Panamanian economy." He was accompanied in the car by
a man of Russian citizenship. On December 4, he was formally arrested by
Swiss authorities for money laundering in criminal case No. P/2489/98, which
was being investigated in Geneva.

Mr. Lazarenko apparently was going to check on his accounts in Switzerland,
or transfer money into other, new accounts. By this time, he did not trust
any of his closest cohorts to do so for him - including his closest co-conspirator,
Mr. Kirichenko. He needed to transfer money to California, where he had
purchased a mansion in Novato (near San Francisco) for $7 million, and where
his wife and children were living. The maintenance and taxes alone on the
house were not insignificant, and he needed to provide for his family. Normally,
he would have entrusted these tasks to Mr. Kirichenko, but for some reason
he did not.

Mr. Lazarenko spent 13 days in a jail cell in Geneva. Then on December
17, bail in the amount of 4 million Swiss francs was posted by an unknown
benefactor, and Mr. Lazarenko was allowed to go free, provided that he would
return to Switzerland to stand trial on money- laundering charges.

CONCLUSION

This final installment about the activities of former Ukrainian Prime
Minister Pavlo Lazarenko is largely based on information published on the
independent Ukrainian website Criminal Ukraine (http://www.cripo.com.ua/)
in 2001. It shows the web of connections between members of the Ukrainian
ruling elite and their families in activities which are improper at best
and most likely illegal.

Meanwhile, the trial of Mr. Lazarenko is scheduled to begin in San Francisco
in November.

In March 1997 a closed tender was held in Kyiv to allocate frequencies
for the GSM-900 system of telecommunications. The winners were announced
at a press briefing by the committee that conducted the tender. The winners
were three companies; the first two were well-established joint-venture
companies operating in Ukraine for a number of years: Ukrainian Mobile Communications
and Ukrainian Radio Systems. The third winner was an unknown company called
Kyiv Star that had neither an address nor a phone number in the capital.

A few days after the results were announced, Motorola, one of the joint-venture
partners of Ukrainian Radio Systems, angrily announced that it was leaving
the country after having invested $500 million into its operations there.
Nobody seemed to care that Motorola was leaving the market. Some were pleased
by this turn of events, especially people in President Kuchma's administration
and in Prime Minister Lazarenko's Cabinet of Ministers.

For weeks prior to the announcement of the winners, the head of the State
Committee on Communications, which was responsible for the tender, had not
been able to get a good night's sleep. He was being bombarded on a daily
basis by telephone calls from the president's administration and from the
Cabinet of Ministers with very explicit instructions on which companies
were to be awarded the tender. His recently appointed first deputy and head
of the committtee on licensing radio frequencies was Oleksander Hneletskyi.

Mr. Hneletskyi had come to Kyiv from Dnipropetrovsk, the hometown of
both Messrs Kuchma and Lazarenko. In Dnipropetrovsk Mr. Hneletskyi had headed
the local telephone network. Soon after the tender ended, Mr. Hneletskyi
returned to his former job in Dnipropetrovsk. He had accomplished his mission
in Kyiv.

Many people wondered where Kyiv Star had come from; it had never placed
a telephone call for anyone anywhere. Soon an announcement was made. It
seems that Kyiv Star had been formed in 1994. Its founding entities were
the State Committee on Communications, the Energy Ministry, the Ukrainian
State Railroad Company, British Telecom, Teller International and the Luxembourg-based
company Impeks Group. But the company was dormant. It made its first mobile
telephone call only on December 9,1997, eight months after winning the GSM-900
tender.

In 1997 Kyiv Star underwent a total reorganization. It went from being
a public stock company to a closed shareholders company under the name Kyivstar
GSM with start-up capital of $28 million. The company officially claimed
that 51 percent of the shares belonged to Ukrainian entities, which consisted
of the companies Storm (21 percent of the shares) and Omega (30 percent);
14 percent belonged to the U.S.-based investment fund Sputnik; and 35 percent
belonged to the Norwegian company Telenor. The CEO of Kyivstar GSM was identified
as Yurii Tumanov.

Soon it became known that Mr. Tumanov was also the CEO of Storm and,
furthermore, that he was the brother of the Ukrainian first lady, Liudmyla
Kuchma. His daughter, Svetlana, also was a leading member of the company.
It was also discovered that Storm owed 31 percent of the shares of Kyivstar
GSM, and not 21 percent as was claimed publicly.

The Omega part of Kyivstar GSM was registered in Dnipropetrovsk in October
1996 and in fact held 20 percent of the shares and was, until recently,
headed by a member of the Ukrainian Parliament, Natalia Donets, a leading
member of Mr. Lazarenko's Hromada Party and a close friend of Mr. Lazarenko's
wife. Presently, Omega is headed by Konstantin Avdeyev, the former personal
bodyguard for Mr. Lazarenko.

Among the founding members of Omega are Nataliya Pushanko and Anatolii
Donets, Natalia Donets' husband. The founding capital for Omega arrived
in 1998 from the company Nemura Industrial Group Ltd., which is registered
in Antigua.

The Nemura Industrial Group Ltd. is not an unknown company in Ukrainian
politics. On July 11, 1997, a Ukrainian-Antiguan joint venture called SP
Pravda Ukrainy was formed by the Kyiv company Puls, which was owned by the
collective of the newspaper Pravda Ukrainy (a newspaper that was the official
voice of the Hromada Party) and the Antiguan company Nemura, whose address
was the same as the Nemura Industrial Group Ltd. The founders of Nemura
were Mr. Lazarenko and Mr. Kirichenko. The bank account of the company was
in the European Federal Credit Bank in Antigua, through which Messrs. Lazarenko
and Kirichenko were laundering vast sums of money.

The third part of Kyivstar GSM consisted of two Sputniks: Sputnik 4 LP,
registered in the U.S. state of Delaware, and Sputnik 5 Holdings Limited,
registered in Cyprus. Both Sputniks listed their representative as one Gregory
Bedrosian. Many in Kyiv suspect that both Sputniks are companies owned,
in fact, by Mr. Lazarenko. The "LP" at the end of Sputnik 4 gives
it away, they claim. Mr. Lazarenko had the habit of inserting his name,
initials, the names of his daughters, the town he was born in and other
similar facts onto his accounts.

By 1998 the leading personalities of Kyivstar GSM consisted of the following
people: Mr. Tumanov (President Kuchma's brother-in-law), chairman of the
board; Yelena Frantsuk (Mr. Kuchma's daughter), who headed the marketing
department; and Irena Yuriyivna Kravchenko (the daughter of former Internal
Affairs Minister Yurii Kravchenko).

The money illegally received for Mr. Kuchma's Kyivstar GSM began in Kyiv
in the offices of Prime Minister Lazarenko, then made its way to Switzerland,
then to Antigua, then back to Dnipropetrovsk and Kyiv. The circle closed
upon itself.

Postscript: On August 15, 2001, Hryhorii Omelchenko, a member of the
Verkhovna Rada and head of the parliamentary Committee on Corruption, called
a press conference and announced that President Kuchma had received a $3.7
million bribe from Mr. Lazarenko and that this bribe was in the form of
capital to form the company Kyivstar GSM. Earlier, in the fall of 2000,
Mr. Omelchenko had sent a request to Ukrainian Procurator General Mykola
Potebenko, asking that Kyivstar GSM be investigated to show if any money
stolen by Mr. Lazarenko had made its way to the company. Thus far, no answer
has been received.